Visable 360
The B2B magazine for digital sales
Visable 360
The B2B magazine for digital sales
Tips & strategies2. February 2023

Niche companies: what to pay attention to

Niche companies focus on the specialisation and individualisation of their products or services, which have just a few or absolutely no competitors. What you need to know when it comes to marketing and facing challenges is revealed here.

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What are niche markets and niche companies?

If you have founded a company, you ideally have an innovative idea or are catering to a niche market – in other words, to the small share of an overall market which offers products or services that are not provided at all or only in part by the current competition. A niche company also closes a gap in markets which address a comparably small target group, but for which there is high demand at the same time.

There are two characteristics which set apart a niche market:

  • There are already offers catering to a special need, but these are not meeting the target group’s expectations. For instance, an online solution for a problem that is very complicated to use or only delivers results that are not adequate. This kind of market is called a latent niche market.
  • There has been no offer to date catering to the special need, so that the target group cannot at all purchase a desired product or take advantage of a service. In this case, the market is called a potential niche market.

Marketing strategies for niche products

To find the right product or a promising service for the niche market, there are four elementary to-dos to keep in mind:

  • Develop a promising idea
  • Scour and compare existing offers
  • Estimate the market volume
  • Define the target group

There are times when coincidences are helpful during the birth of a lucrative idea, and times when successful niche companies have already started to take a strategic approach during this first step. For instance, they have taken advantage of Google Trends as a source of inspiration or used other tools which display developments in social media.

Once an idea has been found and is considered to be promising, the next step is to develop viable monetising and marketing concepts. Short-term returns should not be the focus in such a case – instead, the focus should be on a sustainable and long-term build-up of the company or a new strategic approach.  

Special considerations for search engine optimisation

Especially for the first phase of the market launch, it makes sense to use a company-own website and particularly social media platforms for marketing and sales. When it comes to Instagram specifically, the use of influencers can also be considered – today, this goes for the B2B segment just as much as for B2C. 

Niche companies should also use search engine optimisation (SEO) to increase their visibility on the Internet. Due to the few numbers of competitors, the chance of taking the top spots in the search results list is much bigger than in a mass market. Important to keep in mind: if you offer niche products in need of explanation and with an extremely low search volume, you should focus on keywords which would appear during the research of a problem and on boosting visibility via content marketing measures.

The big advantage when it comes to marketing niche products: with account-based marketing  technology, the advertising messages can be broadcast only to those people who are highly likely to be interested in the product or service. The advertiser profits from high conversion rates and comparably low marketing expenditure.


Challenges niche companies face

If you successfully capture a niche market, you can operate a very lucrative business. But this approach also involves challenges. For instance, niche markets can become absorbed by the overall market over time and then be part of the mass market – once several product developers have specialised in this niche. It is not seldom the case that former top dogs are pushed down by better solutions.

Also, the search for investors in a niche market can become more complex than in a mass market. After all, for many investors, niche products are too specialised, too small and too risky, and the market is also too small – thus, the potential yields are rather low.

Examples of niche products and niche companies

There are numerous companies, known as hidden champions, who have successfully focused on niche markets. In the B2B segment, for instance, Herding GmbH Filtertechnik from Amberg managed the jump from a niche company to a global player. The namesake, Walter Herding, invented the filter technology in the 1970s.

Another example is the company GallerySystems, which has developed a software solution specially for museums and galleries. The program supports museum directors in purchasing, structuring, displaying, photographing and managing rights – a niche in the area of inventory management solutions. Or perhaps BTS Sportsysteme GmbH (German), who is specialised in the installation of flooring and lighting for indoor tennis courts.

In the B2C segment, organic foods had long been a niche product. For some years now, however, a large range of organic foods have been available in supermarkets and discount shops – today, they are now a mass product. Another example is insurance products for a specific audience, such as policies for e-gamers or motorsport athletes.

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